California Real Estate Practice Exam

Which of the following would NOT affect the basis of real property?

1. Maintenance

2. New concrete patio

3. New roof

4. Remodeling

The correct answer is: Maintenance

The basis of real property refers to the amount of investment in the property for tax purposes, including the purchase price and various costs associated with acquiring or improving the property. Maintenance refers to routine care and upkeep of the property, such as cleaning, repairs, and landscaping. While maintenance is essential for preserving property value, it does not add to the basis of the real property. This is because maintenance expenses are typically considered current expenses rather than capital improvements. Capital improvements, like a new concrete patio, new roof, or remodeling, enhance the property value or prolong its life, thereby increasing the property's basis. On the other hand, maintenance merely keeps the property in working condition and does not improve its overall value or functionality. Thus, maintenance does not impact the basis of real property, making it the correct choice for the question regarding which option would not affect the basis.